Blackwater plunged into controversy again

Even as CIA Director Leon Panetta gave the security contractor formerly known as Blackwater a clean bill of health on Sunday, the firm was plunged into a new controversy over its past dealings, this time in Sudan.

According to McClatchy Newspapers, Blackwater, which changed its name to Xe Services last year, “tried for two years to secure lucrative defense business in southern Sudan while the country was under U.S. economic sanctions” in 2006-2007.

“The effort to drum up new business in East Africa by Blackwater owner Erik Prince, a former Navy SEAL who had close ties with top officials in President George W. Bush’s White House and the CIA, became a major element in a continuing four-year federal investigation into allegations of sanctions violations, illegal exports and bribery,” the news organization reported, citing “current and former U.S. officials and hundreds of pages of documents.”

“The focus on Sudan was part of a broader federal probe of Blackwater that began in 2006 and also examined the alleged bribery of foreign officials in Jordan, Iraq and Sudan and the alleged illegal exports of rifles, silencers and other military hardware to the Middle East, some of it hidden in pallets of dog food,” the news organization said. Rather than bring criminal charges against the firm or Prince, McClatchy added, “the government and the private military contractor are negotiating a multimillion-dollar fine to settle allegations that Blackwater violated U.S. export control regulations in Sudan, Iraq and elsewhere.”

A spokesman for Prince, who stepped down as chief executive officer of Xe last year but remains chairman of its parent group, did not immediately respond to SpyTalk’s requests for comment on Sunday.

But Joseph M. Yorio, who was recruited from outside early last year to succeed Prince and bring in new management, said that the firm “has fully cooperated with all government inquiries and investigations.”

“Xe looks forward to resolving all pending issues in a manner that will allow it to continue to serve the U.S. government’s mission,” Yorio said in an e-mail.

Meanwhile, Panetta confirmed SpyTalk’s revelation last week that the agency had awarded Xe a new contract to provide guard services for CIA facilities in Afghanistan and elsewhere.

The firm has “shaped up” under new management, Panetta told ABC’s Jake Tapper.

The CIA director added that Xe had underbid competitors by “about $26 million,” for a contract that SpyTalk’s sources pegged at $100 million.

At the same time Panetta, a former Clinton White House chief of staff and California congressman, implied that no other firm was qualified for the job.

“We’ve got a lot of forward bases. We’ve got a lot of attacks on some of those bases. We’ve got to have security. Unfortunately, there are a few companies that provide that kind of security,” Panetta said. “The State Department relies on them. We rely on them to a certain extent.”

Last week the State Department awarded Xe a $120 million contract to guard new consulates under construction in Afghanistan, a deal that drew sharp criticism from members of the federal Commission on Wartime Contracting.

Panetta told Tapper that a CIA panel had concluded that Xe had “shaped up their act. So there really was not much choice but to accept that contract.”

“But having said that,” he added, “I will tell you that I continue to be very cautious about any of those contracts, and we’re reviewing all of the bids that we have with that company.”

Xe was put up for sale this spring.

Last week, Prince said he was leaving U.S. government business entirely.

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